Research Projects
Research Studies–Data Requests
Call for Papers–Using Retirement Benefits for Workforce Management
Overview
Employers wishing to accomplish certain workforce management objectives have engaged in a variety of strategic approaches. Among those approaches, some employers have found revising current retirement benefit plans or introducing new ones to be effective. A frequently employed method of revising benefit plans is through early retirement windows (sometimes called early retirement incentive programs). In essence, early retirement windows typically provide special incentives, beyond those ordinarily found in a firm's pension and other plans, for employees to voluntarily leave or retire at a particular time.
Often (but not always), early retirement window programs involve extra payments from defined benefit programs. Such programs have been established in both the public and private sector with a myriad of plan designs. Among the designs for these programs, defined benefit plans have been modified by employers to include: (1) extra cash lump sum payments; (2) extra service credits; (3) reduced eligibility requirements for early retirement (often via adding years to actual age); and (4) temporary bridge payments until the age of Social Security benefit eligibility. Designs not involving defined benefit plans have included: (1) cash payments; (2) extended health care coverage; and (3) financial planning/counseling.
In light of recent events, such programs are expected to increase as employers consider ways to better manage their workforces. With this expected trend, a number of questions related to the use of early retirement windows, and benefit plans in general, come to the forefront. What is the most effective way to implement early retirement windows and benefit plan changes with the desired outcomes for all stakeholders? How should these programs be valued and structured? Addressing these questions and others is the motivation for this call for papers.
Content
To expand thinking on the use of retirement benefits for workforce management, the Society of Actuaries' Pension Section Research Team is issuing this Call for Papers, inviting researchers, practitioners, and other professionals to explore this topic from a variety of perspectives.
The Team is seeking to compile papers that represent the latest in thinking about benefit changes related to workforce management including early retirement windows. It is the goal of this effort that taken together, the chosen papers will provide wide–ranging perspectives on this topic.
Authors may submit either original research or expository papers. The papers have no required minimum or maximum length.
The following is a list of potential issues that authors may wish to consider. Please note these issues are only intended to serve as examples and are not meant to restrict potential ideas in any way.
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Cost estimation and implementation considerations for establishing a proposed early retirement window or other benefit changes. Related issues include:
- (1) For pension plans: (i) the appropriateness of considering reductions in normal cost; (ii) amortization choices; and (iii) impact of funding method on cost.
- (2) How to estimate the acceptance rate of the offer and definition of the eligible group (size, employment categories and cut offs).
- (3) Coordination with nonqualified plans.
- (4) The impact of the size of the additional benefit on the acceptance rate.
- (5) Dealing with agent problems (e.g. head of HR or Finance eligible for window).
- (6) Items for disclosure and level of detail.
- (7) The impact of E&O claims.
Note: A paper addressing any of the above will not be viewed as setting a standard.
Methods for determining the direct and indirect overall financial impact (cost versus savings) associated with an early retirement window program. This would include:
Direct Impacts
- (1) Payroll cost reduction
- (2) Benefit cost reductions (i.e., pension and health)
- (3) Direct cost of promotions and training for remaining employees and new hires
Indirect Impacts
- (1) Loss of employees the employer wants to retain
- (2) Rehires/independent contractor cost
- (3) Loss of expertise and institutional knowledge ("Brain drain")
- (4) Indirect training, promotional, and sundry costs
- (5) Savings that would have occurred even if no program were implemented.
A framework for conducting studies on early retirement windows including suggested checklists, steps, and designs.
- Regulatory and compliance issues from both U.S. and Canadian perspectives. Example topics include
- (1) Single employer considerations in a Pension Protection Act context: UCEBs (Unpredictable Contingent Event Benefits), funding levels, restricted benefits.
- (2) Special considerations for plans that are frozen including regulations 1.401(a)(4) and 1.401(a)(26).
- (3) Whether offers can be made just to particular groups or must be made to all employees.
- Case Studies–It would be preferable for abstracts to include case studies that represent lessons learned from a range of plans or from a single plan that is broad in structure, rather than being narrowly defined.
Abstracts may focus on just one type of plan, e.g. single employer, multi–employer, public sector, or non–DB benefits.
As mentioned above, this is just a sample of issues that may fall under the scope of this Call for Papers. Authors may also combine several issues when developing their abstracts.
Procedure for Submission of Abstracts
Please submit an abstract or outline of your proposed paper by November 1, 2009 to:
- Barbara Scott
- Society of Actuaries
- f: 847.273.8592
- e–mail: bscott@soa.org
At a minimum, the abstract submission should include a brief description of the subject of the paper, a list of key items to be covered and a brief biographical paragraph summarizing the author's experience, prior publications and presentations and contact information.
Procedure for Reviewing Abstracts
Submitted abstracts will be evaluated by a review group for their potential for presentation at an SOA–sponsored event targeted in 2010. The exact dates and details will be decided at a later time.
Abstract submissions will be accepted, accepted subject to revision or declined. The review group is scheduled to complete its evaluation of the abstracts/outlines in October 2009.
Submission of Papers
All papers must be based on accepted abstracts and submitted in a complete format no later than March 31, 2010.
The procedure for submission of papers includes the following specific guidelines:
- Submissions that have a copyright must be accompanied by written permission to reprint.
- Submissions should be made electronically to Barb Scott at bscott@soa.org.
Publication and Presentation
The review group, after receiving all submissions, will determine if a meeting event for presenting the papers is appropriate. Should this occur:
- It is anticipated that travel and lodging expenses for authors selected to present at the event will be reimbursed, up to certain limits.
- A final determination as to the number of papers invited to present will be made after all abstracts have been submitted and reviewed.
It is anticipated that all accepted papers will be published. The papers will appear in an on–line monograph and, where appropriate, in Society of Actuaries publications. Upon author request, accepted papers may also be submitted to peer–reviewed journals.
Authors can submit their papers to other publications provided that the Society of Actuaries can maintain the right to publish the papers.
The Society of Actuaries prefers to publish all papers and to copyright all published papers without a previous copyright. However, it will work with authors as necessary for special publication situations.
The Society of Actuaries reserves the right to reject or not publish any papers not meeting the criteria and standards set by the review group.
Questions
Please direct any questions regarding this Call for Papers to:
- Steven Siegel, Research Actuary
- Society of Actuaries
- ph: 847.706.3578
- f: 847.273.8578
- e–mail: ssiegel@soa.org